Role of money market in economic

In their market transactions, those with bulk supplies of funds or demands for them, rely on groups of intermediaries who act as brokers or dealers. This stepped up their agricultural development to a good extent.

But in nearly all such cases there is genuine discontent with the rigidity of these limited facilities and a desire to develop a structure, as well as instruments and procedures, which would provide the open-market attributes of the arrangements that have evolved in the leading countries.

It forms the basis for credit transactions. The monopoly model, already considered by marginalist economists, describes a profit maximizing capitalist facing a market demand curve with no competitors, who may practice price discrimination.

Just as we use yards and meters for measuring length, and pounds for measuring weights, we use money for measuring the value of goods. Drawing on concepts of institutional variance and path dependencevarieties of capitalism theorists such as Peter Hall and David Soskice identify two dominant modes of economic ordering in the developed capitalist countries, "coordinated market economies" such as Germany and Japan and an Anglo-American "liberal market economies".

The consumer receives his income in the form of money rather than in goods and services. Or the government should give it legal sanction. Euro-denominated stock, bond, and derivative markets serve all of the EU countries that use the Euro—replacing smaller, less-liquid, offerings and products that previously were available mostly on a country-by-country basis.

In some countries they do this by issuing their own noteswhich circulate as part of the hand-to-hand currency. Therefore, investment can differ from saving because investment activity is separated from the act of saving.

So the introduction of money has got over the difficulty of barter. There are banks, financial institutions, stock exchanges, produce exchanges, international financial institutions, etc. At times, some smaller banks almost inevitably find that the wholesale facilities of the money market cannot provide promptly the funds needed to meet unexpected reserve drains, as deposits move about the country from one bank to another.

The long-term funds or fixed capital are raised by companies by the issue of sharesdebentures and bonds in the capital market.

Practices of incorporation of non-Western peoples into global markets in the nineteenth and twentieth century did not merely result in the quashing of former social economic institutions.

This raises the demand for money to finance the increased transactions brought about by the expanded level of economic activity. It has little if any contact with the individuals or firms who maintain accounts with these various retailers or purchase their securities or borrow from them.

In the early stages of civilization, different people used different things as money. That, in turn, results in a shrinkage of the outstanding money supply.

And for performing the other two functions—that is, to be used as a store of value and standard of deferred payment—money should have stability of value. Economic geography A widespread trend in economic history and sociology is skeptical of the idea that it is possible to develop a theory to capture an essence or unifying thread to markets.

The central bank can sell some of its marketable assets in the money market or in markets closely interrelated with the money market; payment will be made by drawing down some of the commercial bank reserve balances on its books; and with smaller reserves remaining, the commercial banks will have to sell or reduce some of their investments or their loans.

This is not always possible. He states that a contestable market will never have an economic profit greater than zero when in equilibrium and the equilibrium will also be efficient.In its dynamic role, money plays an important part in the life of every citizen and in the economic system as a whole.

Static Role of Money: In its static role, the importance of money lies in removing the difficulties of barter in the following ways. Economic units also use the money market for their short-term cash demands by maintaining access to the money market and raising moneys there when required.

Money market funds are regulated by the Financial Services Commission (FSC) under numerous provisions of law. Functions of Money in the Modern Economic System. Updated on October 17, we buy a good in the market, we pay a price for it in money.

And price is nothing but value expressed in terms of money. prices, and prices are measured in money. Even a socialist economy, where the price system does not play so important a role as under.

Role of Capital Market in an Economy Financial market deals about the raising of finance by various institutions through the issue of various securities.